Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the case for tenant rent payments to be taken into account by mortgage lenders.
Answered by Lord Bates
Whilst meeting rental payments is not sufficient in itself to demonstrate affordability over the lifetime of a loan, the Government believes it is right that a history of paying rent should be recognised in tenants’ credit scores and in affordability assessments.
That’s why, at Autumn Budget 2017, the Government announced the Rent Recognition Challenge: a £2m competition seeking FinTech solutions to enable tenants to record and share their rental data. The Challenge uses the ingenuity of the technology sector to deliver solutions that work for both consumers and businesses.
One of the leading credit reference agencies Experian has recently announced that rental payments will now be reflected in their credit score reports, and is working with winners of the Challenge.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the future of universal banking in the UK.
Answered by Lord Bates
Financial entities that wish to operate as universal banks are subject to the 2012 Financial Services (Banking Reform) Act. The Act requires large UK banks with retail deposits totaling more than £25 billion to ring-fence the deposits of individuals and small businesses from other activities within their groups, such as investment and international banking. By insulating these core banking services in a separate legal entity, ring-fencing will support continuity of provision of vital services to the economy if there are shocks originating elsewhere in the group and the global financial system. It will also make banks that provide these essential services simpler and more resolvable and therefore prevent the costs of failing banks falling on taxpayers. This restructuring was successfully completed by all UK banks within scope in the summer of 2018 and the regime will come into force in January 2019.
Ring-fencing has been part of the Government’s package of banking reforms since 2010, designed to deliver a stable, sustainable and competitive banking system so banks will be better placed to meet their core purpose of lending to the real economy and contributing to economic growth. As part of this strategy, competition and innovation is at the heart of the Government’s vision for UK financial services to deliver greater choice and value for all.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment, if any, they have made of private equity as an investment vehicle.
Answered by Lord Bates
Private equity and venture capital have provided over £27 billion of investment into more than 3,900 UK companies in the past five years. Between 2008 and 2014 private equity and venture capital generated on average 14.9% annual returns for pension funds and other investors (source: British Venture Capital & Private Equity Association).
The consultation ‘Financing growth in innovative firms’ published in August 2017 recognised that the UK’s private equity industry is very developed, with the UK host to a quarter of the top 20 private equity investors in the world, and the government’s response set out a plan to strengthen the UK’s position as a global leader in the market for growth capital for innovative businesses. Further measures were set out at Budget 2018.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what steps they are taking to increase the number of co-operative companies and institutes in the UK.
Answered by Lord Bates
This Government recognises the value of co-operatives and other mutually owned businesses. The Government’s policy is to maintain a level playing field between co-operatives and other legal forms.
In 2014, the coalition government introduced a number of measures to support the co-operative sector, including consolidating all the existing laws, to make it easier for societies to understand and apply the legislative framework and the rules governing them. The coalition government also simplified the electronic registration process to help new societies start up.
In February 2018 the Government brought forward a measure to bring audit requirements for small co-operatives into line with those for small companies. This measure came into force on 6 April, and will save growing societies thousands of pounds in auditors’ fees that companies of the same size do not have to pay.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what UK Treasury Bills are available for purchase on any given day.
Answered by Lord Bates
Treasury bills are typically sold by the UK Debt Management Office (DMO) via regular tenders each Friday morning. Maturities currently offered for sale are one-month, three-month and six-month bills. Alongside the results of each Friday morning’s tender, the DMO also announces the amounts for sale via tender for the following Friday.
In addition, on any business day, the DMO can sell either new or existing Treasury bills (which match those previously sold at a tender) bilaterally on request from its counterparties, provided that such issuance is consistent with the DMO’s cash management operational requirements.
Finally, Treasury Bill Primary Participants (banks) may also offer a market-making service in all Treasury bills to their own counterparties on any business day.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of peer to peer lending and its potential for growth.
Answered by Lord Bates
The Government believes that peer-to-peer (P2P) lending delivers innovative financial services for both businesses and consumers that can provide competition to the major banks and is keen to see the sector continue to grow and evolve.
The Government has implemented a proportionate, principles-based regulatory regime for P2P lending, balancing the need for consumer protection with allowing the sector to grow and evolve.
P2P business lending grew by 51% in 2017, totalling £1.78bn of lending, according to the British Business Bank’s Small Business Finance Markets Report 2017-18.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the number of ATMs available in the UK; and of the impact on communities of any reduction in the number of ATMs.
Answered by Lord Bates
The Government recognises that widespread free access to cash remains extremely important to the day-to-day lives of many consumers and businesses in the UK. Government has been engaging and will continue to engage with the regulators and industry, including LINK, to ensure that it is maintained. At Spring Statement, Government also launched a public Call for Evidence on cash and digital payments which, amongst other things, seeks to find out how cash usage and need varies by region.
The Government established the Payment Systems Regulator (PSR) in 2015 with a statutory objective to ensure that the UK’s payment systems work in the interests of their users. As part of this, the PSR is monitoring developments within ATM provision. The PSR has undertaken work to understand the impact on the provision of free-to-use ATMs that a reduction in interchange fees may have and a summary of the findings can be found on their website. The Government has therefore not made its own assessment of the impact.
The PSR have also set out three requirements of LINK: that LINK must maintain the current geographical spread of ATMs; that any changes made to interchange fees must be incremental to allow LINK to monitor the impact and take action if the impact is not as expected; and for a greater focus on LINK’s financial inclusion programme, to continue to fill gaps in the network. The PSR has committed to using its powers to act should LINK behave in a way that conflicts with its statutory objectives.
Regarding the number of ATMs available in the UK, this data is publicly available on the LINK website. It shows that, as of 2017, there were around 69,600 ATMs on the LINK network.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the bonuses paid to senior managers of utility companies.
Answered by Lord Bates
Her Majesty’s Government has conducted no formal assessment of the remuneration packages of senior staff in privately owned utility companies. However, the Government has set out a range of legislative and business-led measures which will improve corporate governance and give workers and investors a stronger voice, including at utility companies.
The Government published last month a draft statutory requirement that introduces a number of new corporate governance reforms. These include a new requirement on UK quoted companies to disclose and explain each year the ratio of their CEO’s total remuneration to the average remuneration of their UK employees. The statutory instrument also obliges very large private companies, including utility companies where they are unquoted, to report each year on how they are ensuring good corporate governance. Subject to Parliamentary approval, the relevant secondary legislation will come into force from the start of 2019.
This will sit alongside steps already being taken by the independent regulators of the utilities sectors to encourage these companies to adopt strong corporate governance arrangements. For example, Ofwat have recently consulted on new measures to improve corporate governance in the water sector, including measures to assess the link between executive remuneration, dividend payments and performance delivery for customers. Although these regulators operate independently of government, government engages with them closely to ensure they are able to carry out their functions effectively.
Additionally, the Government has invited James Wates to lead a business and wider society coalition group to develop corporate governance principles suitable for use by large private companies. These principles are currently being consulted on with a view to finalising them by the end of the year.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the reasons for the fall in the price of gold over the last six months.
Answered by Lord Bates
Her Majesty’s Government does not comment on movements in financial markets, including the price of gold.
Asked by: Lord Kennedy of Southwark (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the warning by the Bank of England regarding the impact of Brexit on the derivatives markets.
Answered by Lord Bates
As set out in the Bank of England’s Financial Stability Report, derivative markets could be impacted by the UK’s exit from the EU.
The government has committed to legislate, if necessary, to give UK regulators the power to issue ‘temporary permissions’ for EEA financial services firms to continue operating in the UK for a limited period after withdrawal. However, as the FPC notes in its June 2018 report, “In some areas, such as derivatives contracts, actions would be needed by both UK and EU authorities to preserve the continuity of existing cross-border contracts”.
More broadly, as the Chancellor said on 20 December 2017: “the government is strongly supportive of continued engagement and cooperation between UK and EU regulators to protect financial stability”. HM Treasury and the Commission announced on 27 April that the Bank of England and the European Central Bank will convene a technical working group on risk management in the period around 30 March 2019 in the area of financial services. The working group is up and running and is meeting regularly. This demonstrates a commitment from both the EU and UK to work together to manage shared risks, and will help provide further confidence to financial services firms and their customers as we exit the EU.
In addition, the Chancellor has proposed a new partnership that will focus on developing a mutually agreed and objective framework which maximises the provision of the most important international financial services offerings between the UK and the EU, in a way that is enduring, reliable and ensures financial stability risks can properly be managed.